The Premier League: where the money went in 2009-10

The financial rewards simply for being a member of the Premier League are highlighted today with the release of official figures showing payments from central League funds to each club for the season just finished. The bottom team, Portsmouth, picked up £31.8m from the League in TV cash and prize money while the best-paid team, Manchester United, earned £52.996m.

United made slightly more than title-winning Chelsea (£52.8m) from central funds because United were shown live on TV in Britain twice more than Chelsea, meaning United’s “facility fees” – payments for being on live TV – were higher.

The figures for all clubs are carried in the table below. Every club got £14.6m as an equal share of domestic TV income, plus £10.1m as an equal share of foreign TV income. Facility fees varied depending how many times each club featured in live TV matches, between a minimum of 10 times and a maximum of 24.

“Merit payments” are rewarded according to where each team finished in the League. Portsmouth’s 20th-place finish earned a merit payment of £800,424, Hull’s 19th place earned them twice that sum, Burnley’s 18th place earned them three times £800,424, and so on to the top, where Chelsea’s merit cash was £16,008,480.

The enormous guaranteed sums on offer for membership of the League show why there really should be no need for a well-run club to be facing financial hardship. Central funds are the largest single source of income for most clubs but all clubs also earn millions from ticket sales, sponsorship deals, merchandising and other commercial income, as well as more TV money from matches in the FA Cup, League Cup and / or European competitions.

From next season, when the income streams from the recently negotiated (and improved) 2010-13 TV deals kicks in, the central funds income will climb again, by up to a third. In other words, being the worst team in the Premier League next season, and finishing bottom, will be worth around £40m from central funds alone.

Quite how the clubs choose to spend this income is another matter. The biggest single expense for most clubs in most seasons is the players’ wage bill, and the history of the Premier League has shown wage inflation rising pretty much in line with central funds income.

Clubs are not obliged to spend on wages, of course. Some had been models of prudence, with West Bromwich Albion a recent example the last time they were in the top flight. They spend what they could afford on wages, and went down. But at least they went down in reasonable financial shape and are about to come back up again. That is the juggling act facing all chairmen and chief executives. Do you spend within your means and perhaps struggle (like Burnley in 2009-10) but go down in good shape financially? Or spend within your means and stay up (like Wolves) and then decide whether to stick or twist with the prudence route in the next campaign? Or spend more on wages that you can probably afford in the hope you can stay up or finish higher than before, but pay a hefty price if you fail? (See Leeds and others).

Also shown in the table below are “parachute” payments made to those clubs relegated in the two previous seasons: £12.4m to each of them in 2009-10. Six clubs went down in the last two seasons but only five got parachute money because Birmingham have already returned to the Premier League, so forfeit their parachute cash, which goes instead to the Football League. Parachute payments will surge in value and be extended in length from next season, to £16m per year for the first two years, plus £8m per year for two years after that.